A guide to holiday carry over for employers and HR teams

Whether it’s time off for a holiday, a personal matter or just to spend quality time with the family, every employee needs to take regular breaks away from work to recharge their batteries and maintain peak performance.

Yet according to a recent study by Glassdoor, two in five UK employees (40%) take just half, or less, of their annual leave entitlement each year. It’s often the case that these days are lost without recompense and many staff are told in simple terms to ‘use it or lose it’.

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Written by The Access Group.

What this page covers

What is holiday carry over?
Essential guidelines for UK employers
Top 4 benefits of holiday carry over
How the right software can help manage holiday carry over

From an employer perspective it can be easy to ignore the issue of untaken leave because it alleviates the need to find sufficient cover during absence. However, this is a risky short-term way of thinking and the repercussions of staff burnout, disengagement and turnover can have a much more significant impact on company performance in the long run.

That’s why more and more employers are turning to holiday carry over as a way to engage staff beyond pay and give them more flexibility and control over their own work-life balance.

If your company doesn’t already offer holiday carry over as a core employee benefit, now could be the perfect time to consider introducing it. This guide will walk you through everything employers and HR teams need to know to make holiday carry over a success.

What is holiday carry over?

Holiday carry over (also known as holiday rollover) is a workplace policy that gives staff the option to retain the annual leave they haven’t taken by adding this to their allowance for the following year.

Unlike holiday entitlement this is not a legal requirement, which means it’s at the discretion of each employer whether they offer the benefit of carrying holidays over or not. Before implementing this policy, it’s important that employers have a clear understanding of the rules and guidelines that apply to what can be carried over and when.

Essential guidelines for UK employers

Every employment contract must state how many days’ leave can be carried over into the following year and if there is any cut-off point within the following year by which rollover days need to be taken.
Make sure you understand the difference between statutory leave, national bank holidays and other contractual entitlements.
For companies offering standard holiday entitlement, the maximum amount of holiday that can be rolled over in a year is eight days. If an employee is contractually entitled to more than 28 days annual leave then you may allow them to carry those over too on top of the eight days.
Set a minimum and maximum number of days that can be carried over by staff in any given year. It is quite common for companies to choose to cap the amount that can be rolled over to three to five days.
It’s important to support managers and staff with the tools they need to manage annual leave effectively, such as an intuitive staff holiday booking system and absence management software. Ideally these tools should link together to make it simple to sync data and keep everyone on the same page at all times.

1. It makes it easier to manage annual leave

Holiday carry over helps HR to manage cover by easing the pressure involved with the typical year-end deadlines and preventing annual leave bottlenecks. For instance, if like most businesses your holiday year runs from 1st January to 31st December there’s always the risk of a ‘skeleton staff month’ towards the end of the year when multiple staff rush to book off their remaining days or weeks at the same time.

Other employees may not want to run the risk of having holiday left at year-end which they would subsequently lose, so they choose to book all their days earlier in the year. This is fine until something unexpected comes up and they have to ask to take unpaid leave, perhaps to attend a funeral or visit a sick relative.

It can be a tough task to find sufficient cover in these scenarios, which means organisations are often forced to accept lower levels of attendance and productivity during certain times of the year. Holiday carry over helps prevent such bottlenecks whilst also ensuring that no member of staff feels rushed or hard done by when holiday is left unused.

2. It drives staff engagement and retention

Every business wants to attract and retain the best available talent but offering higher than market average salaries may not always be an option, particularly in times of economic uncertainty. HR leads must think creatively when shaping an employee benefits package that stands out in their industry and engages staff beyond pay.

Most staff appreciate the option to carry over leave because it gives them more flexibility and control over their leave entitlements. For example, an employee may have a big birthday celebration coming up in the following year for which they’re planning the trip of a lifetime. Holiday carry over makes it far easier to plan ahead of time and use their leave allowance in a way that will allow them to feel fulfilled in their personal lives.

3. It makes great financial sense

One of the best things about holiday carry over is that it doesn’t cost your business anything to implement. With the right HR system in place, it’s also easy to stay on top of scheduling, leave requests and deliver maximum efficiency with minimal resources.

Your recruitment and hiring managers will also be able to discuss carrying over holiday as a valuable benefit when interviewing and onboarding the best available talent. This isn’t something offered by every employer, so it can be a nice differentiator for businesses looking to attract top quality employees and minimise the costs associated with recruitment.

4. It aligns with your wellbeing policy

The relationship between psychological wellbeing and staff performance has been well-documented in recent years, and affording people more autonomy in different aspects of their role plays a big part in that.

Holiday carry over is a policy that can contribute greatly to the feel of your workplace culture by giving employees more choice over when they take their holidays. It also ensures that staff will not lose a significant portion of their annual leave entitlement each year if they fail to take all their allotted time off. This helps ensure that your people have enough time away from the stresses involved in their day-to-day role and that, over time, they are not succumbing to the risks of presenteeism or a lack of downtime outside of work.

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How can the right software help you manage holiday carry over and annual leave?

Keeping on top of annual holiday entitlement for all staff can be a complex process, especially if you’re still relying on outdated spreadsheets and laborious manual processes.

Modern HR software simplifies the management of annual leave by providing one centralised repository for holiday data and requests, whilst also enabling organisations to stay on top of legal and contractual requirements. A good system also helps managers and employees to avoid ‘use it or lose it’ disputes, human errors and bottlenecks during key points of the year. It’s also possible to set up automated notifications and alerts to remind employees of how many holidays they have left and the importance of taking breaks away from work.

If everyone works a five day week and has the same statutory holiday entitlement of 28 days, then administering rollover of some of those days is relatively simple. However, for companies with part-time, casual or agency workers – or long-serving or senior employees who have additional entitlements – it can become much more complicated to keep track.

A good starting point is to ask yourself the following questions:

How easy is it for individual members of staff to see the full picture regarding holidays, not only for themselves but also for colleagues in the same team or area? It may be worth investing in a staff holiday booking system to ensure total visibility of annual leave across your entire workforce.
How can individual employees and managers keep track of rollover days with the appropriate deadline, bearing in mind that these must be used before the new year entitlement? Notifications and alerts from your main HR software are a good way to automatically prompt people at the right times.
What can be done to avoid too many people wanting to take holidays during the same time period? This is where a clear policy and simple digital processes can make a world of difference.